Greek Government Bonds Jump 12% As Buyback Means Early Christmas For Hedge Funds

Greek Government Bonds (GGBs) jumped by over 12% today to over EUR40 - by far the highest post-PSI - as fast money floods the limited size illquid market to front-run the Greek buyback. Every day that goes by means less and less benefit for the Greek people as the discounted price of buying back the debt - with all of the money that Greece doesn't have, goes up. This is a perfect example of greater-fool-theory at work as everyone knows that if this price gets too high, the Greek government (via Troika) will (should) reneg on the buyback which will cause GGB prices to plunge back towards zero. What many misunderstand is that the buyback crystalizes the losses for banks that currently carry this worthless paper on their books at Par and garner the carry (and accruals) and thus in true European fashion, the unintended consequence of this action lines the pockets of fast-money hedge funds along for the short-ride and drains any pretense of capital from the Greek banking system.

I’ve been telling people to buy Greek bonds for months now, and snobbish ZHers simply laughed at my investment recommendation with sanctimonious indifference. Now I am finally being vindicated. This investment was a no-brainer. Yields were and are simply ridiculous, given that the Greek situation has largely been resolved and the ECB stands firmly behind bondholders. It takes a common sense value investor to see oportunites like this. Conspiracy theorists are so full of convoluted ideas and projections that they can't see basic realities.

MDB why would this be a good trade? Greece and the ECB are again going to screw private investors. I do not invest in soverign bonds but it looks like this would be a stupid trade. Until the ECB and everyone else takes a write-down nothing will change and these bonds will not make you money.

I am eating crow...they are going to make money on their bonds....I would never touch them ...but how can you predict what the Central Banks will do...i do not have that kind of information...there is no market...

Mostly it says that they want a free exchange zone between EU and US by 2015, the odd are that the monetary union could happen at the same time more or less.

Read that crap years ago from some big US think tank, like in 2007... And nobody in the higher ops saw the crisis coming... right.... It is scary but the conclusion is that it unwinds as expected. As I said elsewhere, we are defeated and by we I mean "the people" and not as "american people only". It is too late, the deal is set, most people are still asleep here in US and in a lot of European countries...